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Capital Management (capital + management)
Selected AbstractsINTEGRATING RISK MANAGEMENT AND CAPITAL MANAGEMENTJOURNAL OF APPLIED CORPORATE FINANCE, Issue 4 2002Prakash Shimpi Capital management and risk management are two sides of the same coin. But by treating them separately, the conventional theory and practice of corporate finance fails to account for important connections between them. Moreover, an exclusive focus on debt and equity ignores the full range of capital resources available to a corporation, thus distorting management's view of the firm's cost of capital (and its return on equity). An understanding of the role of corporate capital,including off-balance sheet as well as paid-up capital,and its relationship to the riskiness of a firm's activities provides the foundation on which the author builds a corporate finance framework that ties together both the insurance and capital markets. This framework, called the "Insurative Model," captures the economics of both conventional insurance and corporate finance instruments and embraces a wide variety of solutions and instruments,be they debt, equity, insurance, derivative, contingent capital, or any other,and allows managers to evaluate their effectiveness in a consistent, unified way. The Insurative Model demonstrates that a company's decisions on insurance and risk retention can be just as important as its decisions about its debt-equity mix. In fact, the determination of a firm's optimal debt-equity ratio should be the last in a series of capital and risk management decisions. Earlier decisions should address risk retention, risk transfer, and the optimal amounts and structure of off-balance-sheet capital used to support the company's retained risks. [source] Risk management lessons from Long-Term Capital ManagementEUROPEAN FINANCIAL MANAGEMENT, Issue 3 2000Philippe Jorion The 1998 failure of Long-Term Capital Management (LTCM) is said to have nearly blown up the world's financial system. For such a near-catastrophic event, the finance profession has precious little information to draw from. By piecing together publicly available information, this paper draws risk management lessons from LTCM. LTCM's strategies are analysed in terms of the fund's Value at Risk (VAR) and the amount of capital necessary to support its risk profile. The paper shows that LTCM had severely underestimated its risk due to its reliance on short-term history and risk concentration. LTCM also provides a good example of risk management taken to the extreme. Using the same covariance matrix to measure risk and to optimize positions inevitably leads to biases in the measurement of risk. This approach also induces the strategy to take positions that appear to generate ,arbitrage' profits based on recent history but also represent bets on extreme events, like selling options. Overall, LTCM's strategy exploited the intrinsic weaknesses of its risk management system. [source] TRADER EXPLOITATION OF ORDER FLOW INFORMATION DURING THE LTCM CRISISTHE JOURNAL OF FINANCIAL RESEARCH, Issue 3 2009Fang Cai Abstract By using a unique data set of audit trail transactions, I examine the trading behavior of market makers in the Treasury-bond futures market during the Long-Term Capital Management (LTCM) crisis in 1998. I find strong evidence that during the crisis market makers in the aggregate engaged in anticipatory trading against customer orders from a particular clearing firm (coded PI7) that closely match various features of LTCM's trades through Bear Stearns. I also show that a significant percentage of market makers made abnormal profits during the crisis. Their aggregate abnormal profits, however, were more than offset by abnormal losses following the recapitalization of LTCM. [source] Society announces new award for early-career researchersASTRONOMY & GEOPHYSICS, Issue 5 2009Article first published online: 18 SEP 200 Generous sponsorship from Winton Capital Management has made possible two new RAS Awards, to be given annually to postdoctoral researchers who have made outstanding progress in the years immediately after their PhD. [source] INTEGRATING RISK MANAGEMENT AND CAPITAL MANAGEMENTJOURNAL OF APPLIED CORPORATE FINANCE, Issue 4 2002Prakash Shimpi Capital management and risk management are two sides of the same coin. But by treating them separately, the conventional theory and practice of corporate finance fails to account for important connections between them. Moreover, an exclusive focus on debt and equity ignores the full range of capital resources available to a corporation, thus distorting management's view of the firm's cost of capital (and its return on equity). An understanding of the role of corporate capital,including off-balance sheet as well as paid-up capital,and its relationship to the riskiness of a firm's activities provides the foundation on which the author builds a corporate finance framework that ties together both the insurance and capital markets. This framework, called the "Insurative Model," captures the economics of both conventional insurance and corporate finance instruments and embraces a wide variety of solutions and instruments,be they debt, equity, insurance, derivative, contingent capital, or any other,and allows managers to evaluate their effectiveness in a consistent, unified way. The Insurative Model demonstrates that a company's decisions on insurance and risk retention can be just as important as its decisions about its debt-equity mix. In fact, the determination of a firm's optimal debt-equity ratio should be the last in a series of capital and risk management decisions. Earlier decisions should address risk retention, risk transfer, and the optimal amounts and structure of off-balance-sheet capital used to support the company's retained risks. [source] Working capital management in SMEsACCOUNTING & FINANCE, Issue 3 2010Sonia Baños-Caballero G30; G31; G32 Abstract This paper analyses the determinants of Cash Conversion Cycle (CCC) for small- and medium-sized firms. It has been found that these firms have a target CCC length to which they attempt to converge, and that they try to adjust to their target quickly. The results also show that it is longer for older firms and companies with greater cash flows. In contrast, firms with more growth opportunities, and firms with higher leverage, investment in fixed assets and return on assets have a more aggressive working capital policy. [source] Why working capital drives M&A todayJOURNAL OF CORPORATE ACCOUNTING & FINANCE, Issue 2 2007James S. Sagner Merger and acquisition (M&A) activities once focused on strategic transactions for diversification, or for vertical or horizontal integration. But today, the goal of the M&A game is often improving working capital management. It's a complete revolution in the way we look at M&A candidates. What's going on? © 2007 Wiley Periodicals, Inc. [source] From Public To Private: Evidence From a Transitional Economy SettingAUSTRALIAN ACCOUNTING REVIEW, Issue 3 2009Tyrone M. Carlin The literature on public financial management reform has devoted comparatively little attention to the detail and effect of reform process implementation in developing economies. This study contributes to an understanding of this phenomenon by examining the impact of privatisation on a sample of previously state-owned enterprises in Vietnam. Using a detailed, financially focused methodology and drawing on data sourced from audited general purpose financial statements, our analysis suggests evidence of material variation in financial performance and position post-privatisation compared to the position observed immediately prior to privatisation. Specifically, our data suggest that after being privatised, firms generally exhibit reductions in profitability, some degree of improvement in working capital management, an increase in financial leverage accompanied by a higher degree of solvency risk and greater calls on cash resources for the purpose of funding capital expenditure. Our results assist with understanding the impact of privatisation as a reform technique in developing economies, and may help policymakers and managers better target areas of likely risk, during the process of transition from public to private ownership. [source] | ||||||||||||||||||||||